A twice-weekly syndicated newspaper column on California public affairs.

Friday, February 28, 2014

RECENT HISTORY SHOWS TAX REBATES A BAD IDEA

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 14, 2014, OR THEREAFTER

BY THOMAS D. ELIAS

“RECENT HISTORY SHOWS TAX REBATES A
BAD IDEA”

If there’s a state budget surplus,
let’s return it to the people we took it from, goes the demand these days from
conservative Republicans led by Assemblyman Tim Donnelly, who now represents a
lot of barren desert and would like to
be governor of California.

It’s quite a siren song and one we’ve
heard before, most recently 14 years ago. Who wouldn’t like to open the mail
and find a fat check from the state?

But it’s a bad idea. Just ask Gray
Davis, the former governor ousted in a 2003 recall election and replaced by
muscleman actor Arnold Schwarzenegger.

Davis acquiesced in 2000, when
legislative Republicans voiced precisely the same arguments made by Donnelly
today. A case can be made that there was a straight line from the rebates he
ordered then to the recall. The refunds ranged up to $150 for 12.3 million Californians
who filed tax returns in 1999 ($300 for couples filing jointly).

Those checks weren’t the only way
Davis returned money to taxpayers. He also cut the vehicle license fee (aka:
the car tax) and exempted 275,000 public school teachers from having to pay any
state tax on their teaching income. He increased the research and development
credit for corporations from 12 percent to 15 percent. He doubled property tax
assistance for the disabled and those over 62 and he gave $600 a month each to
senior citizens in rent relief.

Then came the dot-com bust, and
suddenly – because Davis had passed back all that cash – he couldn’t prevent
wholesale budget cuts to schools, highways, state parks and other vital
programs.

The first thing he tried was to
reinstate the old levels of car tax. That produced huge recall-season rallies
in car dealer lots, most featuring Schwarzenegger and others claiming Davis was
unilaterally raising the levy. In fact, he was and he wasn’t, depending on how
you looked at it. But he needed the $3.9 billion he had earlier cut from the
car tax in order to spare many other programs.

Obviously, there’s a lesson here for
Brown, one that he has heeded. Brown so
far has completely ignored the calls of Donnelly (one of just two Republicans so
far entered as candidates to replace Brown in this year’s election).

Instead, his budget proposal includes
$1.6 billion for the opposite of rebates – a rainy day fund designed to prevent
shocks like those of the Davis era if capital gain taxes – a major part of the
state’s income tax take – suddenly plummet as they did in 2001-2002. Brown, who
once employed Davis as his chief of staff, has certainly learned from his
onetime protégé’s politically fatal mistake.

This may infuriate Donnelly and
conservative Republicans whose ideological forebears had no problem with deep
cuts in social services like care for the frail elderly and preschool
education, not to mention public schools and universities, carried out under
Davis, Schwarzenegger and Brown.

Instead of giving tax rebates,
Donnelly griped, Brown is “giving pay increases to union members while leaving
regular, hardworking taxpayers out to dry.” In short, Donnelly indicates
doesn’t believe unionists are taxpayers or that parents of schoolchildren pay
taxes. Huh?

He sounds a lot like current
Congressman, then state Sen. Tom McClintock did back in 2001, when he exhorted
Davis to “return the state’s surplus as a rebate to help families cope with
high prices. The governor’s spokesman said this relief ‘won’t see the light of
day.’ We beg the governor (Davis) to reconsider.”

Davis did, and ended up the only
California governor ever kicked out before his term ended, also becoming
the butt of endless jokes. Wisecracked late-night television host Jay Leno, “An
NBC News poll has found that if the election were held today, 31 percent of
Californians would vote for Schwarzenegger and 26 percent were not sure. Today
Gray Davis changed his name to ‘Not Sure.’”

Brown has been the butt of plenty of
jokes in his career and doesn’t want any more of that. So you can safely bet
there will be no tax rebates, no givebacks, no response comparable to Davis’ to
the current demands of Donnelly and friends.

-30-
Email Thomas Elias at
tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising
Cancer Treatment and the Government’s Campaign to Squelch It," is now
available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.

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About Me

Thomas Elias writes the syndicated California Focus column, appearing twice weekly in 88 newspapers around California, with circulation over 2.2 million.
He has won numerous awards from organizations like the National Headliners Club, the California Newspaper Publishers Association, the Los Angeles Press Club, and the California Taxpayers Association. He has been nominated three times for the Pulitzer Prize in distinguished commentary.
Elias is the author of two books, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It" (now in its third edition; also published in Japanese and recently optioned for a television movie) and "The Simpson Trial in Black and White," co-authored with the late Dennis Schatzman.